Wednesday, March 30, 2011

Bullish. Bullish. Bullish....yeah, yeah, yeah - not so fast!

Few people seem to take a stand when it comes to the markets and to attempt to be honest about that stand. I absolutely stand by my post of last Friday exactly as it was written. Nothing for me has changed. The reason that I gave the market till the first few days of this week was that the most likely scenario for my systems is to take more than one entry into a trade.  The Russell 2000 system had only one entry short as of the close last Friday. At least one or two more entries seemed logical. Today we got the third short entry for that system and the largest size entry so far in the trade. If I am end up being wrong, then I tried and I will probably not going have great performing trades here. I have a few points I would like to make before I have to go out to a meeting.
  1. Volume was incredibly light in the professional futures markets.
  2. The S&P500 sold off after large trades hit bid near the highs...while shorts continued to get squeezed in the Russell and the Mid Caps.
  3. There were a lot of small size trades lifting the asks this afternoon in the Russell. These traders are mot likely setting themselves up for disappointment.
  4. Everyone can now clearly see the the sell off was a wave 4 - which it most probably was not.
  5. The dollar held its ground and bonds are not confirming equities.
  6. The NASDAQ 100 has many many components that are clearly putting in a-b-c wave counter trend pushes.
  7. Most Elliott wavers are looking for the infamous wave 5 and then then really really infamous wave 3 down. They will most likely not be in either trade successfully.
  8. Volume really sucked (oh, I said that)
  9. VIX not comfirming market highs.
  10. Copper not rallying.
  11. Stops were taken out and markets diverged literally one going up while the other was going down. Selling was also stronger than people are asuming on the nasdaq and s&p500. Confusion amongst the markets is not a sign of a strong market.
  12. Financials are NOT performing
  13. I have major cycles short on the Euro and long on the Dollar
  14. A perfect A-B-C symmetry and major trend line was hit on the Russell - dead nut.
  15. Same trend line off highs also was sold on the S&P500.
  16. The consensus has everyone looking up because this market defies logic and the patterns look enticing...nothing like a well laid trap!
I view it, that out of a market seemingly able to ignore every rational interpretation of risk and reward, confidence is way too high and a major crash is pending

In accordance with this, I am now nicely short.
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